Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
1
CapitalP
rote
ct
Cre
ate
Wealth
“Rule No 1: Never lose moneyRule No 2: Never forget rule No 1.”
- Warren Buffet
2
“In the short run, the market is a voting machine, But in the long term,
it is a weighing machine”
- Ben Graham
“Successful investing is about owning businesses and reaping the huge
rewards provided by the dividends and earnings growth”
- John Bogle
We Protect Capital
3
• Close eye on earnings growth drivers• Close eye on valuations• Continuous monitoring of risk
Exit Strategy
• Portfolio exposure increased over a period• Not averse to raise cash
Staggered Approach
• Diversification across industries • Diversification across Mcap with focus on liquidity:
• ≥ 50% in large cap USD1bn+ , ≤ 10% in one stock , ≤ 30% in one sector, ≤ 50% in the top 10 stocks, Minimum investments in 30 stocks
• Flexible investment style: Growth as well as Value with focus on Margin of Safety
Investment Universe
A prudent risk management strategy is the core of our investment philosophy
We Create Wealth
3M Stock Selection Approach
Identify Size of Sector Opportunity
M: Market Size
4
Size of the opportunity should be huge to generate significant investment
returns
Identify the stock for investment with
Reasonable Valuation
M: Margin of Safety
The company should provide reasonable growth opportunity at reasonable Margin
of Safety
Identify top 5 (Profitable) players in
the sector
M: Market Share
The company be consistently profitable and should be among the leading
players in the industry
Leading To Multibagger Returns
5Note: Purchase price adjusted for any corporate action like split/bonusGain % indicates return since purchase, *Stock sold as per price mentioned
Stock Purchase Date
Purchase Price (Rs)
Price(Rs)31-Aug-2017
Motherson Sumi 28-Jan-10 20.5 308
Maruti Suzuki 29-Jan-14 1659 7700
Eicher Motors* 8-Aug-13 3343 15249
Hitachi Life* 22-May-14 300 1360
Shree Cement 12-Nov-11 3983 17591
Siyaram Silk Mills 1-Aug-14 604 2287
Bajaj Finance 14-Sep-15 514 1782
Bayer Cropscience 5-May-14 1427 4633
Ramco Cements 28-Mar-14 213 691
Timken India 22-May-14 233 720
Eveready* 29-Sep-14 102 302
HDFC Bank 28-Oct-10 670 1784
HDFC 10-Dec-10 669 1777
Indo Count Industries* 19-Dec-14 297 785
Capital Trust* 29-Jun-15 253 601
Mannapuram Finance* 16-Dec-15 29 69
3M India 24-Nov-14 6475 14744
ITD Cementation* 23-Feb-15 65 143
Shankara Building Products 6-Apr-17 570 1193
Gabriel India* 1-Aug-14 55 114
KNR Construction* 3-Dec-14 304 608
Minda Industries 03-Mar-17 444 845
1402%
364%
356%
353%
342%
279%
247%
225%
224%
209%
196%
166%
166%
164%
138%
135%
128%
120%
109%
108%
100%
90%
Gain (%)
6
Earnings Matrix Sensex AAA IOP Sensex AAA IOP Sensex AAA IOP
FY17 FY17 FY18E FY18E FY19E FY19E
EPS G(%) 1% 24% 12% 28% 18% 28%
ROE(%) 13% 16% 13% 19% 15% 24%
P/E(x) 23.4 35.6 20.9 27.4 17.7 21.4
P/BV(x) 3.0 6.2 2.8 5.3 2.6 5.4
AAA Portfolio Superior Earnings Growth
Source: AAA Research
Source: AAA ResearchSource: AAA Research
20%
24%
28% 28%
-1%
1%
12%
18%
-5%
0%
5%
10%
15%
20%
25%
30%
FY16 FY17 FY18E FY19E
EPS Growth(%)
AAA IOP Sensex
16% 17%19%
24%
13%
19%
13%15%
-5%
0%
5%
10%
15%
20%
25%
30%
FY16 FY17 FY18E FY19E
ROE(%)
AAA IOP Sensex
Wealth Creation – A Case Study
7
✓ Global home textile segment of $74bn growing at 5%✓ USA imports 17% made ups with imports growing at
~12%✓ Huge opportunity to improve market share for Indian
players in USA and Europe
✓ Reported healthy revenue and profit growth in last 5 years
✓ Ongoing expansion will lead to healthy profit growth over next 2-3 years
✓ Purchased at one year forward PE of ~6x significantly lower considering its net profit size (Rs 100 crs+ FY14) and 45% ROE
Indo Count Industries Ltd
✓ India expected to become the 5th largest consumer durables market by 2025, reaching $400 Bn by 2020
✓ Total Size of Indian A/C industry pegged at Rs.14750 Crs, with volume growth expectation of CAGR 13-15% over FY16-20E
✓ At 3%, India is one of the lowest penetrated market, leading to significant headroom for growth
✓ Market share of ~8%✓ Entry into Tier 2&3 markets with sub premium product to
improve its market share✓ Launched new products to reach mass consumer levels✓ Strong parentage means access to new technology to
offer world class products to Indian consumers
✓ Expect significant growth in profitability backed by operating efficiency and higher volume growth
✓ Market cap at Rs 800 crs, i.e. PER of below 10x FY15E –lowest in the industry compared to all consumer MNC which trades at average PE of >20x
M1
Mar
ket
size
M2
Mar
ket
Shar
eM
3M
argi
n o
f sa
fety
Hitachi Home and Life Solutions Ltd
✓ 4th largest bed sheet exporter to USA & 13th largest globally
✓ Capacity expansion from 36 to 68 mn meters in last 5 years and further expanding to 90 mn meters
✓ Focus on improving value chain by entering premium bed linen segment leading to improved operating margins
✓ No major investment in backward integration – leading to highest ROE of 44% in the industry
The Investment Process….
Stock Identification
Analysis & Decision making Process
Portfolio Construction Monitoring & Nurturing
Exiting & Realizing Value
• Identify emerging trends and opportunities from a universe of 450 companies• Filter approach – using variety of valuation parameters• Strong intermediary relationship
• Initial screening• Corporate meeting and detailed due diligence• Presentation to investment committee seeking recommendation and approval
• Constant evaluation of valuation metrics to decide optimum return potential • Intrinsic value V/s Current Market Price to evaluate Margin of Safety• Change in underlying assumptions of investment thesis
• Combination of Top Down and Bottom Up approach with a benchmark agnostic strategy to achieve Long term investment objective
• Continuous portfolio monitoring ensures prudent risk management• Regular interaction to provide strategic inputs to strengthen systems, controls and CG
in line with best practices
8
9
Exit Strategy As Important As Entry Strategy
Exit from Sensex 01 Jan 2011 Vs
01 Jan 2001
Exit from Sensex 30 May 2016 vs
01 Jan 2011
ACC DLF
Ambuja Cement Hindalco
Bajaj Holdings Jaiprakash Associates
Castrol India JSPL
GSK Pharma Reliance Communication
Grasim Sterlite
HPCL Tata Power
MTNL
Novartis
Ranbaxy
Reliance Infra
Reliance Petro
Satyam
Zee
Name of company Peak Price (Rs)
Current Price(Rs)
MTNL 200 20
Reliance Infra 2500 498
DLF 1200 193
Jaiprakash Associates 312 29
Reliance Communication 820 26
Tata Power 155 82
Fundamental Consistency check No. of BSE 500 Stocks
PAT growth 20%+ every year during FY06-FY15 0
Revenue growth of 10%+ every year with ROE15%+ during FY06-15
16
Monitoring of the Portfolio is critical
Market Outlook
10
Round Up – August 2017
11
The U.S. economy grew faster than initially thought in the second quarter, at its quickest pace in more than two years, and there are signs that the momentum was sustained at the start of the third quarter. GDP grew at 3% in Q2CY17 Vs expectations of 2.7%. Japan's economy expanded at the fastest pace in more than two years in the second quarter as consumer and company spending picked up. Similarly, The Chinese economy advanced 6.9% in Q2CY17 Vs. markets expectation of 6.8%. Growth remained at its strongest level since the Q3CY15, as industrial output and retail sales picked up while fixed-asset investment remained strong. China’s PMI at 51.7 in Aug’17 further improved and was above expectations of 51.3 as per Reuters poll. The uptick in August was driven by strong production and a rise in new orders attributed to domestic demand. Though Industrial output in China slowed in July, after an unexpectedacceleration in June.
Data released by CSO shows that India’s GDP growth slipped in Q1FY18 to 5.7%. Compared to the Q4FY17 slowdown, that was largely related to lack of availability of cash, the weakness in Q1FY18 was due to adjustments to the inventories by companies in view of the GST implementation from July 1. The mainstay of growth during the quarter continued to be government spending and private consumption, though at rates lower than in Q4FY17. Consumption is expected to boost growth in the rest of FY18 as incomes areboosted by Pay Commission, good agriculture produce (good rainfall and higher MSP).
The Nifty-50 Q1FY18 PAT declined 7.5% yoy against an street expectation of 0.6% yoy growth. GST-led de-stocking impacted earnings of consumer companies. Currency appreciation along with sector specific issues resulted in disappointing performance in export oriented sectors like Pharma, Software and Textiles. There were some positive signs in capital goods segments as players like Thermax, ABB are witnessing strong traction in domestic spends.
After the disruptive forces like ‘Demon’ and GST, we expect the earnings-growth to revive from 2HFY18. Macroeconomic picture continues to remain favourable – inflation and interest rates to remain low. Government’s efforts to kick start the economy is already visible through strong capital expenditure growth. Affordable housing is another strong reform by the govt and this reform is likely to give boost to sectors like building materials, consumer products and generate employment.
We continue to remain positive on the markets with 3- 5 years view. We advise investors to use the corrections to increase allocation to the equities.
UDAY (Ujwal Distribution companies (DISCOMs) Assurance Yojana) financial turnaround and revival package for DISCOMS via improving efficiency, reducing cost, and enforcing discipline
Bankruptcy Bill and Indradhanush to improve flow of capital and recapitalise public sector banks
Auction-based allocation of natural resources (e.g., coal)
Goods and Services Tax (GST) to streamline and simplify the national tax system
Direct Benefits Transfer (through the Jan Dhan–Aadhaar–mobile trinity) to promote direct transfers of financial benefits to beneficiaries’ bank accounts
Pradhan Mantri Awaas Yojana (Housing for All by 2022) – now middle income group also to get interest subsidy
India – Ongoing Reforms…
12
13
Aadhar Card – Financial Inclusion
UID Enrollments 100 Cr (80%)
5.9 Cr
(60%)
Aadhar linked MNERGS Cards
11.4 Cr
(45%)
Aadhar linked ration cards
12.3 Cr
(71%)
Aadhar linked LPG Connections
Jan Dhan
25 Cr Aadhar linked Bank
accounts opened
Source : RBI, Ministry Of Finance
GST- Size Of Opportunity For Organised Sector
14
Source: Edelweiss, AAA Research
Demonetisation and GST will lead to market share shift from unorganised to organised sector, leading to 3-10x increase in Size of opportunity in the listed equity space.
Packaging
Electrical Equipment
Plastics
Tiles
Apparels
Plywood
Dairy
Diagnostics
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00
Un
org
anis
ed
Sh
are
(%)
Size of Oppportunity (Organised Sector)(no of times over 10 years)
4-5x
6-9x
Drivers Of Growth – Investment By Government
15
9900
20003621
798010000
25000
0
5000
10000
15000
20000
25000
30000
FY12 FY13 FY14 FY15 FY16 FY17E
MORTH Project Awards (Kms)
Source: MORTH, AAA Research
5
12 11
16
32
19
0
5
10
15
20
25
30
35
FY13 FY14 FY15 FY16 FY17 FY18E
Railways Expenditure growth (%)
Source: Emkay Research, AAA Research
30.043.6
-17.7
1.6
33.1
52.7
15.9
-8.0
3322
-49.3
54.969.1
-60
-40
-20
0
20
40
60
80
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Revenue Spending by Government (%)
Source: MOSL Research, AAA Research
7.5
-24.4 -18.7
239.1
20.3
-165.7
11.532.8
7.2 25.8
115.7
37.7
92.4
-200
-150
-100
-50
0
50
100
150
200
250
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Govt Capex Growth (%)
Source: MOSL Research, AAA Research
India Economy Recovery: Likely Repeat of FY03-08
16
Source: CSO,MOSL, AAA Research
Source: RBI, AAA Research
4.2
5.4
3.8
8.07.1
9.5 9.6 9.3
6.7
8.6 8.9
6.7
4.5 4.75.5
7.67.1
0123456789
1011
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
GDP Growth (%)
5.0
2.7
5.7
7.0
11.7
8.6
12.9
15.5
2.5
5.3
8.2
2.9
1.1
2.8 2.41.2
0
2
4
6
8
10
12
14
16
18
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
IIP Growth(%)
Average IIP: 5.6%
Average IIP: 6.9%
Dissecting the economic recovery of FY03-08
27%
40% 39.7%
16%
31%
47.9%
26%
90%
47.3%
23%
11%
26.1%
53%
65%
45.8%
33%
60%
72.3%
43%
62%
22.0%
32%
73%
54.4%
17.6%
15.6%
52.2%
21% 21%
26.6%25%
38.7%
0%
20%
40%
60%
80%
100%
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
PA
T
Mca
p
Auto Banking Cement ConsumerFMCG
ConsumerDurables
Engineering IT Mining &Metal
Oil & Gas Pharma Sensex
Sectoral CAGR FY03-08 (%)
Source: BSE, AAA Research
Sensex Net profit CAGR: 25.0%Sensex Returns CAGR : 38.7%
Market Cap Returns > Net Profit Growth
17
0
2
4
6
8
10
12
14
16
BSE Auto BSE Banking BSEConsumer
Durable
BSE CapitalGoods
BSE FMCG BSEHealthcare
BSE IT BSE Metal Sensex
5.3x
6.6x
3.3x 3.2x 2.7x
8.7x
15x
7x
5.1x
Source: BSE
Sensex went up by 5.1xCyclical indices went up by 5-15x
Dissecting The Economic Recovery Of FY03-08
18
Focus On Stock Earnings Growth - Earnings Growth To Bounce Back
19
Source: Bloomberg , AAA Research
81 129181
250 266 291 278 280216 236 272
348450
523
718833 820 834
10241124
1183
1340135513401353
1516
1789
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY0
3
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
E
FY19
E
FY93-96EPS CAGR 45%
FY96-03: EPS CAGR 1%
FY03-08 EPSCAGR 25%
FY08-16 EPSCAGR 6.1%
FY17-19E EPSCAGR 15.0%
Sensex CAGR -1.4%
Sensex CAGR 38.7%
Sensex CAGR 6.2%
SensexCAGR
??
Sensex CAGR 13.9%
After reporitng single digit earnings growth (FY08-16), Sensex is expected to report healthy double digit growth (FY17-19E)
Earnings growth critical for returns
20
Source: AAA Research
BSE500 universe ex PSU Banking and Loss making companies
3 years 5 years 10 years
Net ProfitCAGR (%)
(Mar-17/Mar-14) (Mar-17/Mar-12) (Mar-17/Mar-07)
No of CompaniesMarket Cap
CAGR (%)No of Companies
Market Cap CAGR (%)
No of CompaniesMarket Cap
CAGR (%)
80% + 11 35.6% 7 32.1%
50-80% 25 55.6% 13 36.6% 10 57.5%
30-50% 43 39.1% 40 38.6% 40 33.0%
20-30% 49 38.1% 57 25.6% 71 21.3%
15-20% 40 28.9% 35 22.1% 60 17.4%
10-15% 41 13.5% 37 15.9% 65 13.6%
5-10% 31 13.2% 50 15.3% 49 12.6%
0-5% 40 13.0% 33 11.6% 31 3.8%
0-(-20)% 67 5.8% 84 3.4% 45 1.2%
Total 347 356 371
NIFTY 11.00% 11.60% 9.20%
SENSEX 9.80% 11.30% 8.50%
No of companies 15%+ CAGR Net Profit
168 152 181
Big Events during last three years
21
China Slowdown – Fall in commodity prices
China – Yuan Devaluation
BrExit – Europe Slowdown
US election – Donald Trump elected against prediction
Demonetization Impact
Uncertainty in the short term creates opportunity in the long term
Market Valuations
22
Sensex @32515 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E
EPS (Rs) 821 826 1,013 1,123 1,185 1,340 1,355 1,340 1,353 1,516 1,789
EPS G(%) -1% 1% 23% 10% 6% 13% 1.1% -1.1% 1.0% 12.0% 18.0%
BV (Rs) 4,441 5,101 5,944 6,842 7,790 8,862 9,540 10,143 10,684 11,290 12,006
P/E(x) 29.0 27.4 24.3 23.4 23.7 23.4 20.9 17.7
P/BV(x) 4.8 4.2 3.7 3.3 3.1 3.0 2.8 2.6
ROE(%) 18.5% 16.2% 17.0% 16.4% 15.2% 15.1% 14.2% 13.2% 12.7% 13.4% 14.9%Source: Bloomberg, AAA Research
Source: AAA ResearchSource: AAA Research
7
12
17
22
27
Au
g-0
7
Au
g-0
8
Au
g-0
9
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
P/E Fwd (x)
P/E Fwd(x)
1.3
1.8
2.3
2.8
3.3
3.8
4.3
4.8
5.3
Au
g-0
7
Au
g-0
8
Au
g-0
9
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
P/B Fwd (x)
P/B Fwd(x)
Mean 17.4x
Mean 2.7x
The people running the show at AlfAccurate Advisors
23
The AlfAccurate Advisors Team
24
Rajesh Kothari Govind Agrawal
Founder and Managing Director Director
Bhushan Koli
Head Operations and Compliance
Bhushan Koli
Award Winning Investment Team
Mr. Rajesh Kothari – Managing Director (Grad CWA, MBA)
➢ Rich experience of more than 22 years in Indian capital market
➢ Expertise in both Long Only & Long Short investment strategy
➢ Former Director with Voyager Investment Advisors (US$500m) – USA based India dedicated
fund for two and half years
▪ During his tenure, fund Outperformed the benchmark indices significantly
➢ Former Fund Manager with DSP Merrill Lynch (now DSP Blackrock) Fund Managers Ltd for
more than four years
▪ During his tenure equity assets under management grew from USD100m to USD1.5bn
▪ The schemes delivered annualized return of 55% (Equity Fund) & 62% (Top100 Fund) outperforming
benchmark indices by more than 20% & 10% respectively
▪ The equity schemes maintained its “1st Quartile Ranking” consistently during his tenure
25
Achievements:
➢ Received CMA Young Achiever Award 2014
➢ Rated as “Platinum Fund Manager” by Economic Times for DSP ML Equity Fund on a risk-adjusted return
basis in July 2006
➢ Rated as “Gold Fund Manager” by Economic Times for DSP ML Balanced Fund on a risk-adjusted return
basis in July 2006
➢ CNBC TV18 - CRISIL Mutual Fund of the Year Award 2006 for DSPML Equity Fund
➢ Lipper India Fund Awards 2006 for best equity fund group for 3 years
➢ DSPML Technology.com Fund - best fund in the equity sector in the IT category (5 years, 8 eligible schemes)
➢ He was invited at Maharashtra Economic Summit to present views on Indian Infrastructure
(http: //maharashtrasummit.mieda.in/Program.aspx)
➢ Invited by Institute of Directors to present views on Governance Deficit
➢ Invited by World Council for Corporate Governance to present views on Governance
➢ Elected on the advisory panel of World CSR forum.
➢ Actively involved with Arham Yuva Group - a philanthropic initiative
Award Winning Investment Team
26
Glimpses Of Superior Performance To Benchmark Index
27Note: Past performance may or may not be sustained in future
Consistent Superior returns to Benchmark Index
*(FY10 is from 23 Nov 2009 - 31 Mar 2010)#(01 Apr 2017 – 31 August 2017)
-6.0
133.0
38.9
84.7
5.8 6.018.2 9.7 11.7
29.0
71.9
2.8
28.216.1
-11
85
17
70.5
-7.9
3.9 8.4
-9.1
4.817.1
33.2
-7.8
24.08.9
-50
0
50
100
150
FY03 FY04 FY05 FY06 Jun06-08 FY10* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 YTD#
DSP MerillLynch MF Voyager AlfAccurate Advisors
Funds Managed by Rajesh Benchmark Index
0200400600800
10001200140016001800200022002400260028003000
FY03 FY04 FY05 FY06 Jun06-Dec08
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#
Funds managed by Rajesh(%) BSE 500 Index(%)
27.2% CAGR
13.8% CAGR
Rs 10,000 invested in Mar02 is worth presently Rs 3,09,760
Mr. Govind Agrawal – Director (FCA – Chartered Accountant, LLB)
➢ Rich experience of 28 years in finance out of which last 22 years in Indian capital market
➢ Former Fund Manager with Reliance Capital Asset Management Company (USD 20bn) for over
four years.
▪ Reliance Emergent India Fund (USD 100m offshore fund) outperformed benchmark indices by 35% since
its inception.
▪ Travelled intensely across globe to meet the investors and presented the firm for India and Emerging
Market as Investment Theme
▪ Played instrumental role in setting up Macro Economic Research desk
➢ Former Executive Director with UBS Securities India Pvt Ltd, a Swiss Bank subsidiary, for 4 years
▪ Responsible for India Account Manager for large FIIs
▪ Guided the portfolio managers for right country, sectors and stocks weightings
Award Winning Investment Team
28
➢ Former Senior VP – Equity Sales with Motilal Oswal Securities Ltd for 10 years
▪ Played key role in establishing institutional equity broking business, systems and processes
▪ Was account manager for major institutional domestic and foreign accounts advising the clients on sectoral allocation
and stock selection
Achievements
➢ Represented Reliance AMC on international platforms and panel discussion on Emerging Markets and Indian
Equity Market
➢ Addressed investors’ meet and the private banking teams of large banks in Middle East, Asia, London,
Europe and in India
➢ At UBS, was voted as the “Best Equity Sales Person‐Mega Funds category, Asia Money 2006”
➢ Won several awards at Motilal Oswal for consistently contributing to Institutional Equity Sales
29
Award Winning Investment Team
The AlfAccurate Advisors philosophy
30
AlfAccurate Advisors
To be the world’s most admired investment advisor
We are specialists in Indian capital markets with combined experience of 70+ years
Protect Capital , Create Wealth
31
Our Guiding Principles
Ambition
Entrepreneurship
Accountability
Passion
Excellence
Commitment
Teamwork
Integrity
Meritocracy
32
Investment Philosophy...
33
Fundamental Research core ofour investment management
Long Term Horizon
Constant endeavor to be ahead of the Market
Emphasis on value research Vs commodity research
Benchmark aware but not driven
Flexible investment style
Focus on margin safety
Combined With Investment Discipline...
Parameter Rules Current Position
Cap Exposure At least 50% in Mega & large cap (More than USD1bn) 54.0% invested in Mega & Large cap
Sector Weightage Not more than 30% in one sector Maximum exposure in a given sector is 20.6%
Stock WeightageNot more than 10% in a given stock and not more than 50% in the top 10 Stocks
Maximum Exposure in a given stock is 3.9%. Top 10 stocks as percentage of portfolio is 28.6%
Number of Stocks Minimum 30 Stocks 53 stocks
Stock Universe 450 Corporates 450 Corporates
Number of Stocks: 53Number of Sectors: 16Top 10 Stocks as % of portfolio: 28.6%Data as on 31 Aug 2017 34
39%
15%
29%
13%
3%
Portfolio Allocation
Mega Large Mid Small Cash
Sector Allocation
Agri Input Auto Auto Ancillary BankingCement Chemicals Consumer EngineeringOil & Gas Others Pharma PowerReal Estate Retail Software TextilesCash & Cash Equivalent
Leading To Superior Performance
Performance (%)FY18YTD#
FY17 FY16 FY15 FY14 FY13 FY12 FY11 Since Inception*
AAA India Opp. Plan 16.1 28.2 2.5 71.7 29.0 11.2 9.6 18.6 415.4
BSE 500 Index 8.9 24.0 (7.8) 33.2 17.1 4.8 (9.1) 7.5 106.7
BSE Sensex 7.1 16.9 (9.4) 24.9 18.8 8.2 (10.5) 10.9 84.7
CNX Nifty 8.1 18.5 (8.9) 26.7 17.9 7.3 (9.2) 11.1 94.3
*(23 Nov 2009 – 31 August 2017)(Management fees adjusted); #(01 April 2017 – 31 August 2017)
AAA India Opp. plan consistently not only outperformed but also generated Positive return in volatile markets
Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
35
18.69.6 11.2
29.0
71.7
2.5
28.216.1
7.5
-9.1
4.817.1
33.2
-7.8
24.08.9
-20
0
20
40
60
80
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#
AAA India Opportunity Plan - Equity Vs BSE 500 Index (%)
AAA India Opportunity Plan - Equity BSE 500 Index
Leading To Superior Performance
36
Leading To Superior Performance
37
AAA India Opp Plan ranks # 1 compared with 141 diversified funds of each reputed fund house
Average Monthly Rolling Returns Since Inception(%)
Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
Compounded Annual Returns (%)
1 YEAR 2 YEARS 3 YEARS 5 YEARS Since Inception*
AAA India Opp. Plan 23.0 19.3 24.8 29.4 23.6
BSE 500 Index 16.3 14.3 10.9 15.7 9.8
BSE Sensex 11.5 9.9 6.0 12.7 8.2
CNX Nifty 12.9 11.5 7.6 13.5 9.0
*(23 Nov 2009 – 31 Aug 2017 )(Management fees adjusted)
*Since Inception (23 Nov 2009 – 31 Aug 2017 )(Management fees adjusted)
Performance Vs leading Mutual Funds Since Inception(%)
Source: Bloomberg
415.4
265.7
183.9141.8
88.2 106.7 84.7 94.3
AAA IndiaOpp.Plan*
Quartile 1 Quartile 2 Quartile 3 Quartile 4 BSE 500Index
BSESensex
S&P CNXNifty
24.426.2 25.7
10.1 10.7 10.4
0
5
10
15
20
25
30
1 Year 3 year 5 Year
AAA India Opp. Plan BSE 500 Index
38
Risk Analysis : AAA IOP PMS Performance Compared To Benchmark
Parameters How to read ratioAAA IOP
PMSBSE500 Index
AAA IOP PMS performance
BetaLess than 1 beta is good sign as it denotes lower volatility of the
portfolio0.85 1.0
Beta of 0.85 shows AAA PMS has lesser volatility compared to BSE500 Index
Sharpe Ratio Excess return per unit of
deviation. Higher the Sharpe ratio, better it is.
1.2 0.2Top Performing Midcap MFs have Sharpe Ratio 0.75+. AAA IOP PMS Sharpe ratio is
one of the best in the industry.
Standard DeviationStandard deviation denotes
amount of variation14.2 15.0
AAA IOP SD is less than Benchmark as well as peer group which shows portfolio has
lower risk
Upside capture It denotes overall performance
of PMS during up markets. 168.6 100.0
Upside capture ratio of more than 100 indicates that fund has outperformed Benchmark during positive markets.
Downside captureIt denotes overall performance of PMS during down markets.
79.8 100.0Ratio of less than 100 indicates, fund has
outperformed Benchmark during negative markets.
Capture Ratio
Capture ratio >1 indicates, Investment Manager has gained
more during up (positive) markets and lost less during
down (negative) markets.
2.11 1AAA PMS 2.11 capture ratio is healthy as
it protected capital during negative markets and building wealth consistently.
Data is analysed since inception of AAA IOP PMS data i.e. 23 Nov 2009 - 31 Aug 2017
AAA IOP PMS Rolling Return Analysis
39
Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
Since Inception (23 Nov 2009 – 31 Aug 2017) (Management fees adjusted)
Monthly Rolling Returns Analysis(%)
AAA IOP 1 Year
BSE500 Index 1 Year
AAA IOP3 Years
BSE500Index 3 Years
AAA IOP 5 Years
BSE500 Index 5 years
No of obervations 83.0 83.0 59.00 59.00 35.00 35.00
No of Positive Observations 77.0 62.0 59.00 53.00 35.00 35.00
No of Negative Observations 6.0 21.0 0.00 6.00 0.00 0.00
Loss Probability (%) 7.2% 25.3% 0.0% 10.2% 0.0% 0.0%
Average Returns (%) 24.4% 10.1% 26.2% 10.7% 25.7% 10.4%
Median Returns (%) 18.4% 7.2% 29.5% 12.2% 25.4% 10.2%
Maximum Returns (%) 88.8% 51.3% 41.0% 22.9% 30.6% 16.0%
Minimum Returns (%) -13.8% -27.4% 6.2% -4.2% 21.9% 5.6%
➢ AAA has delivered average returns of 24.4%, 26.2% and 25.7% for 1 year, 3 years and 5 years respectively on monthly rolling return basis
➢ Negative returns for 3 years and 5 years rolling periods are 0
Note: Equity return scenarios are assumed expected returns.
The Power Of Compounding – A Scenario Analysis
40
Scenarios based on investment of Rs 5 Crores
The real power of compounding is seen only over the long term
12% CAGR 15% CAGR 20% CAGR
30Yrs
150 Cr
9 Cr
20Yrs5Yrs 10Yrs
16 Cr
48Cr
331 Cr
20 Cr
5Yrs
82 Cr
20Yrs 30Yrs10Yrs
10 Cr
10Yrs 30Yrs
717 Cr
20Yrs
137 Cr
26 Cr
5Yrs
11 Cr
30Yrs20Yrs
1,187 Cr
5Yrs
31 Cr
192 Cr
10Yrs
12 Cr
18% CAGR
Why We Should Be Your Choice Of Investment Advisory
41
Strong domain knowledge in Indian Capital markets
Expertise in both – Long Only and Long Short Investment Strategy
Sound Research capabilities
Award winning investment team and track record Process driven organization
Adequate infrastructure to support scalability
Integrity and ethics as the core of the business
Access to Founders – founders are fund managers
Staggered investment approach
Client centric business model
No conflict of interest
Product Features
42
Name of plan AAA India Opportunity Equity PMS Plan
Objective Long Term Capital Appreciation
Investment ThemeTo invest in listed companies with combination of high growth stocks as well as value stocks
Principal Officer Rajesh Kothari
Director Govind Agrawal
Custodians Deutsche Bank, India
Fund Accountant Deutsche Bank, India
Depository Participant IL&FS, India
Mode of payment Fund transfer/cheque/stock transfer
Awards and Recognitions
43
Dr. Jitendra Singh, Union Minister of State (I/C), Prime Minister Office, giving Certificate of Merit – CMA Young Achiever Award – 2014
Lipper Fund Award – India 2007
44
Thank You Rajesh KothariT: +91 22 42360301M:+91 98200 [email protected]
Govind AgrawalT: +91 22 42360 311M: +91 93208 [email protected]
AlfAccurate Advisors Pvt. Ltd503, B Wing, Naman Midtown,Elphinstone Road, Mumbai - 400 013, IndiaT: +91 22 42360300; F: +91 22 42360333 [email protected]
Disclaimer: Equity Investments are subject to market risks , read all plan related documents carefully. This document is not for public distribution and has been furnished to you solely foryour information and may not be reproduced or redistributed to any other person. This material is for the personal information of the authorized recipient. The material is based uponpublicly available information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. Opinions expressed are our currentopinions as of the date appearing on this material only. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject tochange without notice. Past performance may or may not be sustained in future. No part of this material may be duplicated in any form and/or redistributed without AlfAccurate AdvisorsPvt Ltd.'s prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot beguaranteed. Alfaccurate Advisors Pvt. Ltd and any person connected with the firm, does not accept any liability arising from the use of this document.
Contact us: